Laswell v. AG Seal Beach, LLC

• Decision Date: 09 November 2010
• Docket Number: No. B221481.,B221481.
• Court: California Court of Appeals Court of Appeals
• Parties: Louise LASWELL, Plaintiff and Respondent, v. AG SEAL BEACH, LLC et al., Defendants and Appellants.

189 Cal.App.4th 1399

117 Cal.Rptr.3d 310

10 Cal. Daily Op. Serv. 14,214

2010 Daily Journal D.A.R. 17,142

Louise LASWELL, Plaintiff and Respondent,

v.AG SEAL BEACH, LLC et al., Defendants and Appellants.

No. B221481.

Court of Appeal, Second District, Division 1, California.

Nov. 9, 2010.

**313 Liedle, Getty & Wilson, William C. Wilson, Mary P. Miller, San Diego; Boudreau Williams and Jon R. Williams, for Defendants and Appellants.

Law Offices of Michael F. Moran, Anaheim, Michael F. Moran and Lisa Trinh Flint, for Plaintiff and Respondent.

ROTHSCHILD, J.

*1402 Defendants AG Seal Beach, LLC, AG Facilities Operations, LLC and Country Villa Service Corporation appeal from the trial court's order denying their petition to compel arbitration of plaintiff Louise Laswell's action against them for elder abuse and related claims. Because we conclude that the trial court erred in denying the petition to compel arbitration, we reverse the order and remand the matter for entry of a new order granting the petition.

FACTUAL AND PROCEDURAL BACKGROUND

1. The Complaint, Answer and the Trial Court's Grant of Trial Preference

On June 26, 2009, Laswell, by and through her daughter Susan Lyons, under a power of attorney, filed a complaint alleging that Laswell had received improper care and treatment at the 24-hour health facility in Seal Beach where she resided from October 21, 2008 to December 10, 2008. Laswell was admitted into the facility at age 92 for post-operative rehabilitative care following hip surgery. In her complaint, she named as defendants AG Seal Beach, LLC, the licensee and operator of the health facility doing business as Country Villa Seal Beach Healthcare Center; AG Facilities Operations, LLC, the owner of AG Seal Beach, LLC and Country Villa Seal Beach Healthcare Center; and Country Villa Service Corporation, doing business as Country Villa Health Services, the management company of Country**314 Villa Seal Beach Healthcare Center in charge of the day-to-day operation, patient care and maintenance of the health facility (collectively, defendants).

According to the complaint, while Laswell resided at Country Villa Seal Beach Healthcare Center, she was neglected, abandoned and abused, resulting in injuries to her body, severe anemia, an infection in the coccyx area, right lower lobe pneumonia and malnutrition. Laswell alleged causes of action against all defendants for elder abuse under the Elder Abuse and Dependent Adult Civil Protection Act (Welf. & Inst.Code, § 15600 et seq.); negligence; willful misconduct; and violation of Penal Code section 368, and an additional cause of action against AG Seal Beach, LLC, as the licensee of the health facility, for violation of Health and Safety Code section 1430, subdivision (b).¹ Laswell sought compensatory and punitive damages, statutory remedies, attorney fees and costs.

*1403 On August 13, 2009, defendants filed the operative amended answer to Laswell's complaint, asserting numerous affirmative defenses, including that the matter is subject to binding arbitration.

Soon thereafter, on September 10, 2009, Laswell filed a motion for trial preference under Code of Civil Procedure section 36, subdivisions (a) and (d), on grounds that she was 93 years old and had been certified twice by a physician for hospice care as terminally ill with a life expectancy of less than six months and, as a result, that trial preference was necessary to preserve her interests and prevent prejudice in the matter. After a case management conference, the trial court granted the motion, noting that Laswell was 93 years old and terminally ill, and set a trial date of February 1, 2010.

2. The Petition to Compel Arbitration and the Trial Court's Denial of the Petition

On or about November 19, 2009, defendants moved to compel arbitration, asserting that a valid arbitration agreement provided for arbitration of "any and all disputes or claims ... arising out of the provision of services by the [f]acility," defined as Country Villa Seal Beach Healthcare Center, or that "allege violations of the Elder Abuse and Dependent Adult Civil Protection Act." According to defendants, the arbitration agreement complied with all of the requirements specified in Health and Safety Code section 1599.81 for arbitration clauses in contracts of admission to health facilities,² Laswell **315 had signed the agreement consenting to arbitration, and the agreement had never been revoked. Defendants thus asserted the matter was required to proceed in arbitration, but Laswell refused to arbitrate the dispute.

Laswell opposed the petition, arguing, as relevant to this appeal, that (1) the arbitration agreement was invalid and unenforceable because Laswell lacked *1404 the capacity to execute it; (2) the presence of third-party defendants not subject to arbitration and the possibility of conflicting rulings on common issues of law and fact rendered arbitration inappropriate; and (3) the causes of action for elder abuse and violation of Health and Safety Code section 1430, subdivision (b), are not arbitrable.

In reply, defendants conceded that, as specified in Health and Safety Code section 1599.81, subdivision (d), the cause of action for violation of Health and Safety Code section 1430, subdivision (b), was not subject to arbitration, but argued it was a small component of Laswell's case, could be litigated in court to determine any statutory remedies and attorney fees after arbitration and should not operate as a pleading tactic to defeat a valid arbitration agreement and undermine the public policy in favor of arbitration. Defendants also asserted that Laswell had not demonstrated mental incapacity and that all defendants were related Country Villa entities, represented by the same counsel, and would consent to arbitration.

Although the trial court concluded that defendants had made a "prima facie case for arbitration," it denied the petition to compel arbitration. Viewing whether to compel arbitration as a discretionary question, the court decided that it would not "make[ ] sense to send the matter to arbitration" because (1) there were parties who would not participate in the arbitration given that they were not part of the agreement; (2) there were some causes of action not subject to arbitration; (3) the trial date was set for less than two months away and the case would proceed just as expeditiously in court as in arbitration; (4) Laswell was 93 years old and there need not be two proceedings under the circumstances; and (5) the question of arbitration should have been raised more promptly, such as when Laswell had moved for trial preference, although that failure was not necessarily a waiver of the right to arbitrate.

Defendants timely appealed. (Code Civ. Proc., § 1294, subd. (a) [order denying petition to compel arbitration is appealable].)

DISCUSSION

1. California Has a Strong Public Policy Favoring Contractual Arbitration and Thus Requiring Enforcement of Valid Arbitration Agreements

A trial court is required to order a dispute to arbitration when the party seeking to compel arbitration proves the existence of a valid arbitration agreement covering the dispute. ( Garrison v. Superior Court (2005) 132 Cal.App.4th 253, 263, 33 Cal.Rptr.3d 350.) Under Code of Civil Procedure section 1281.2, "[o]n petition of a party to an arbitration agreement alleging *1405 the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy**316 if it determines that an agreement to arbitrate the controversy exists, unless it determines that" the case falls into one of three limited exceptions. (Italics added.) Similarly, Code of Civil Procedure section 1281 provides, "[a] written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract." These " 'statutes evidence a strong public policy in favor of arbitration[ ], which policy has frequently been approved and enforced by the courts.' " ( Madden v. Kaiser Foundation Hospitals (1976) 17 Cal.3d 699, 706, 131 Cal.Rptr. 882, 552 P.2d 1178; Rowe v. Exline (2007) 153 Cal.App.4th 1276, 1282, 63 Cal.Rptr.3d 787 ["A strong public policy favors the arbitration of disputes, and doubts should be resolved in favor of deferring to arbitration proceedings"].)

One of the limited exceptions to the enforcement of contractual arbitration provisions is where "[a] party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact." (Code Civ. Proc., § 1281.2, subd. (c).) This exception " 'addresses the peculiar situation that arises when a controversy also affects claims by or against other parties not bound by the arbitration agreement.' " ( Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 393, 25 Cal.Rptr.3d 540, 107 P.3d 217.) The exception thus does not apply when all defendants, including a nonsignatory to the arbitration agreement, have the right to enforce the arbitration provision against a signatory plaintiff. ( Molecular Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 709, 111 Cal.Rptr.3d 876; RN Solution, Inc. v. Catholic Healthcare West (2008) 165 Cal.App.4th 1511, 1519, 81 Cal.Rptr.3d 892; Rowe v. Exline, supra, 153 Cal.App.4th at p. 1290, 63 Cal.Rptr.3d 787.) The exception " 'is not a provision designed to limit the rights of parties who choose to arbitrate or otherwise to discourage the use of arbitration. Rather, it is part of California's statutory scheme designed to enforce the parties' arbitration agreements....' " ( Cronus Investments, Inc. v. Concierge...